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Comparison between the US and Japanese banking systems

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  1. One important cultural difference : time perception
    1. The roots of the US and Japanese perceptions of time
    2. Polychronic versus Monochronic systems
    3. Which effects can implied these differences ?
  2. How the political and historic backgrounds influenced US and Japanese economies ?
    1. US evolution
    2. Japanese evolution
  3. Results-oriented versus Patient capital
    1. Results orientation
    2. Japanese patient capital
  4. How could evolve both systems ?
    1. The Big Bang reforms
    2. The required equilibrium

The Japanese and the Americans have different perceptions of time. This difference exists as part of their culture and the values they advocate. The cultural, political and historical background consequently leads to two different banking forms: the bank-based and the market-based systems. Until the 1990s, many observers acknowledged that the "patient capital vision" that implied a long-term relationship with the banks was greatly a part of the Japanese success. However, the results-oriented American behavior proved its efficiency during the 1990s while Japan was undergoing a severe financial crisis. However both systems have their own advantages and there is no "one best way".

[...] The long-term frame fosters high savings from households and this is still one of the pillar of the Japanese financial system (Avery and Elliehausen 1986). - Weaknesses The bank-based system produces less public information and gives more importance to informal arrangements. The implicit contracts such as the life time employment decreased the efficiency of the firms (Shleifer and Summers 1988). The strong bank governance also weaken the internal governance and this is one of the main reason that lead to the 1990's crisis (Kanaya and Woo 2000). [...]

[...] The Japanese Banking Crisis of the 1990's : Sources and lessons, . Keizai, K. (1985). ?Japan : An international comparison?, Tokyo, p5. Lane H., Distefano J. and Maznevski M. (2000). ?International Management Behavior?, 4th edition, Blackwell Publishing, Malden. Mayer, C. (1997). ?Financial System and corporate governance : a review of the International evidence?, Wallerfangen/Saar, Germany. Masulis, R. (1980). effects of capital structure policy change on security prices : a study of exchange offers?, Journal of Financial Economics, pp 158-159. [...]

[...] During the 1990's, the bubble burst and the Japanese economy was under a severe crisis. This speculation problem hid other ones with greater consequences. Ide (1996) reported that the return on equity fell from 11.9 percent to 3.8 percent during this period. The Japanese firms suffered from a major lack of profitability : weak corporate governance and forbearance regulation were the two main factors behind this distress (Kanaya and Woo 2000). III- Results-oriented versus Patient capital During the 1980's and the fast Japanese growth, many observers were skeptics about the efficiency of the short-term orientation. [...]

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